The Republic of The Gambia approves acquisition of 80% stake in high potential offshore blocks
• FAR has acquired 80% working interest and Operatorship in the highly prospective offshore Blocks A2 and A5 in The Gambia from ERIN Energy Corporation • Blocks A2 and A5 located on trend and adjacent to FAR’s Senegal blocks and world class SNE field with potential prospective resources of more than one billion barrels of oil* • Large prospects identified similar to the SNE field “shelf edge” play • FAR to fund ERIN through an exploration well expected to be drilled late 2018
The Government of The Republic of The Gambia in West Africa has approved the assignment of an 80% interest in offshore Blocks A2 and A5 in The Gambia to FAR Limited (ASX: FAR) from the New York and Johannesburg Stock Exchange listed ERIN Energy Corporation.
The acquisition is a significant expansion of FAR’s exploration portfolio in the rapidly emerging offshore Mauritania-Senegal-Guinea-Bissau Basin in West Africa.
The farm-in deal requires FAR to fund ERIN up to US$8 million through an exploration well expected to be drilled late in 2018.
Blocks A2 and A5 are adjacent to and on trend with FAR’s world class SNE oil field discovery and have significant exploration potential. The blocks cover an area of approximately 2,682km2 within the rapidly emerging and prolific Mauritania-Senegal-Guinea-Bissau (“MSGB”) Basin and lie approximately 30km offshore in water depths ranging from 50 to 1,200 meters (see Figures 1 and 2).
In combination, Blocks A2 and A5 have potential to contain prospective resources in excess of one billion barrels of oil (on an unrisked, best estimate, 100% basis*).
From 1,504km2 of modern 3D seismic data acquired in the blocks, FAR has identified large prospects similar to the “shelf edge” plays FAR is targeting in Senegal (see Figure 2). FAR has mapped three potentially drillable prospects and leads.
Figure 1: Blocks A2 / A5, The Gambia location
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FAR and ERIN expect to undertake 3D seismic reprocessing and interpretation during 2017 in order to mature prospects for drilling in late 2018.
Under the terms of the farm-in agreement, a wholly owned subsidiary of FAR, has acquired an 80% interest and Operatorship of offshore Blocks A2 and A5 from ERIN Energy Corporation. FAR will make an upfront payment of US$5.18 million and fund up to US$8.0 million of ERIN’s share of the cost of an exploration well. If ERIN’s share of the exploration well costs is less than US$8.0 million then the balance is to be paid in cash. FAR’s share of the cost of the exploration well is expected to be in the order of US$25.0 to US$30.0 million. The well when drilled will satisfy the current period work commitments for Blocks A2 and A5. FAR has issued a parent company guarantee in favour of the Government of The Gambia in accordance with the Blocks A2 and A5 licence terms. ERIN will retain a 20% working interest in Blocks A2 and A5. The well, to be funded by FAR, is to be drilled before 31 December 2018 or such later date if the current licence periods are extended. The well can be carried out in either Block A2 or Block A5.
FAR Managing Director Cath Norman said:
“FAR is very grateful to have received formal approval from the Government of The Republic of The Gambia for this assignment of interest to FAR. We look forward to working with the Government and our joint venture partner ERIN Energy to carefully and thoroughly explore these highly prospective offshore blocks.
Our discoveries immediately to the North in offshore Senegal provide significant encouragement for the future discovery of oil and gas in Blocks A2 and A5 in The Gambia.
The significant prospectivity that we have identified in Blocks A2 and A5 are analogous play types to those successfully drilled by FAR in Senegal providing high potential to create value for both the people of The Gambia and FAR shareholders.
FAR is committed to building a strong strategic partnership with the Government of the Republic of The Gambia and looks forward to working with the Government and ERIN Energy.”
FAR Price at posting:
7.6¢ Sentiment: Hold Disclosure: Held
(20min delay)